foreign exchange
On 29 September 2021, the Income Tax Department raided the house of a person named Prashant. During this period, the department found foreign currency (Forex), gold and other assets from his house. Later, the Income Tax Department sent a notice and confiscated his properties, which included foreign currency worth about Rs 5.6 lakh.
Prashant first appealed to CIT(A) (Income Tax Commissioner-Appeals), saying that this seizure was wrong. There the decision came in his favor. After this, the Income Tax Department took the case to ITAT Mumbai (Income Tax Appellate Tribunal), but on 28 October 2025, Prashant won the case there too. Advocates Nishit Gandhi and Adanya Bhandari appeared on behalf of Prashant.
What argument did Prashant give?
Prashant told that the foreign currency found with him was purchased legally by him and his family during different foreign trips. Documents like bank statements, receipts of purchases from authorized forex dealers, entry of foreign travel on passport, records of expenses incurred abroad etc. were submitted. He also told that his daughter was studying abroad and his wife had also gone on a foreign trip, so it was natural to have some foreign currency in the house.
What did ITAT say?
If the source of purchase of foreign currency is properly proved, then mere finding of foreign currency in the house cannot be considered illegal. The tribunal also said that it is not practical to expect every person to immediately exchange every dollar or euro as soon as he returns from abroad. How much foreign currency can be kept at home as per law?
According to tax expert Riyaz Thingna
Under FEMA law, an Indian citizen can keep up to 2,000 US dollars (or equivalent foreign currency) in his home. Without any time limit. There is no limit on keeping foreign coins. If there is more than $2,000 in foreign currency, it must be deposited with an authorized bank/dealer or transferred to an RFC account within 180 days. Failure to do so may result in fine under FEMA. CA Dr. Suresh Surana also clarified that you can keep foreign currency up to $2,000 with you indefinitely.
Is it necessary to show foreign currency while filing ITR?
If you have foreign notes held in India and they are within the FEMA limit, then there is no need to show them in Schedule FA (Foreign Assets). But if your annual income is more than Rs 1 crore, then you have to fill Schedule AL in ITR, in which it is necessary to show cash-in-hand. In such a situation, foreign currency will also have to be mentioned.